Cramer v Davies

The High Court of Australia heard an appeal in *Cramer v Davies*. The dispute concerned the interpretation of a will and the extent of a beneficiary's entitlement under it. The primary issue was whether the beneficiary, Mrs Davies, had a right to receive the proceeds of a specific bequest of shares, or if those shares had been converted into money before the testator's death, thereby altering the nature of the bequest.

The central legal question before the Court was whether a demonstrative legacy, which is a gift of a specific sum of money to be paid out of a particular fund or source, had been adeemed. Ademption occurs when the subject matter of a specific or demonstrative legacy no longer exists in the form specified by the testator at the time of their death. The Court had to determine if the testator's actions had effectively changed the nature of the shares from a specific asset to a sum of money, thereby impacting the beneficiary's entitlement.

The Court reasoned that the testator's intention, as evidenced by the will and surrounding circumstances, was paramount. It applied the principle that a demonstrative legacy does not adeem if the source from which it is to be paid is not the sole source of the testator's property, or if the testator has otherwise indicated an intention for the legacy to be satisfied from their general estate. In this instance, the Court found that the testator's actions in selling some of the shares and reinvesting the proceeds did not demonstrate an intention to revoke the bequest entirely, but rather to change the form of the asset from which the legacy was to be drawn. The Court considered the testator's overall testamentary plan and concluded that the beneficiary was entitled to the value of the shares as they stood at the time of the testator's death, or their equivalent value if they had been converted.